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{{Short description|Growing one's existing wealth without creating new wealth}}
{{Use dmy dates|date=November 2018}}
{{Competition law}}
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'''Rent-seeking''' is the act of growing one's existing wealth by manipulating public policy or economic conditions without creating new wealth.<ref>
Compare: {{oed | rent-seeking}} – "'''rent-seeking''' n. ''Economics''[:] the fact or process of seeking to gain larger profits by manipulating public policy or economic conditions, esp. by means of securing beneficial subsidies or tariffs, making a product artificially scarce, etc. [...]"
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Rent-seeking activities have negative effects on the rest of society. They result in reduced [[economic efficiency]] through [[allocation of resources|misallocation of resources]], stifled [[Competition (economics)|competition]], reduced [[wealth creation]], lost [[government revenue]], heightened [[income inequality]],<ref>{{cite web |url= https://www.imf.org/external/pubs/ft/wp/2001/wp0115.pdf |title= Rent-seeking and Endogenous Income Inequality |author= IMF |access-date= 30 April 2014}}</ref><ref name="Deaton2023">{{cite book |last=Deaton |first=Angus |author-link=Angus Deaton |url=https://books.google.com/books?id=guS3EAAAQBAJ&pg=PA95 |title=Economics in America: An Immigrant Economist Explores the Land of Inequality |date=2023 |publisher=[[Princeton University Press]] |isbn=978-0691247625 |location= |page=95}}</ref> heightened debt levels,<ref>Chari, Anusha, et al. "The Baker Hypothesis: Stabilization, Structural Reforms, and Economic Growth." ''The Journal of Economic Perspectives'', vol. 35, no. 3, 2021, pp. 83–108. [https://www.jstor.org/stable/27041216 JSTOR website] Retrieved 24 Apr. 2025.</ref> risk of growing [[corruption]] and [[cronyism]], decreased [[public trust]] in institutions, and potential national decline.

Successful [[regulatory capture|capture of regulatory agencies]] (if any) to gain a [[coercive monopoly]] can result in advantages for rent-seekers in a [[market (economics)|market]] while imposing disadvantages on their uncorrupt competitors. This is one of many possible forms of rent-seeking behavior.

==Theory==
The term "rent", in the narrow sense of [[Law of rent|land rent]], was coined by the British 19th-century economist [[David Ricardo]],<ref>{{cite web |url=http://www.econlib.org/library/Enc/RentSeeking.html |title=Rent Seeking |last= Henderson|first= David R. |author-link=David R. Henderson |publisher=[[Econlib.org]]}}<!-- This is an original essay by Henderson, not available via other sources. --></ref> but rent-seeking only became the subject of durable interest among economists and political scientists more than a century later after the publication of two influential papers on the topic by [[Gordon Tullock]] in 1967,<ref>{{cite journal |last=Tullock |first=Gordon |year=1967 |title=The Welfare Costs of Tariffs, Monopolies and Theft |journal=Western Economic Journal |volume=5 |pages=224–232}}</ref> and [[Anne Krueger]]<ref name=Krueger1974>{{cite journal |last=Krueger |first=Anne |year=1974 |title=The Political Economy of the Rent-Seeking Society |journal=American Economic Review |volume=64 |issue=3 |pages=291–303 |jstor=1808883}}</ref> in 1974. The word "rent" in the context of "rent-seeking" does not refer specifically to payment on a lease but rather to [[Adam Smith]]'s division of incomes into [[Profit (economics)|profit]], wage, and [[economic rent]]. The origin of the term refers to gaining control of [[land (economics)|land]] or other natural resources.<ref>{{Cite web |title=The Wealth of Nations/Book I/Chapter 11 - Wikisource, the free online library |url=https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_11#226 |access-date=2024-11-19 |website=en.wikisource.org |language=en}}</ref>

===Georgist===
[[Georgist]] economic theory describes rent-seeking in terms of land rent, where the value of land largely comes from the natural resources native to the land, as well as from collectively paid-for services, such as state schools, law enforcement, fire prevention, and mitigation services. Rent seeking, according to the Georgist, does not include those persons who have invested substantial capital improvements in a piece of land, but rather those who perform their role as mere titleholders.

===Relation to profit-seeking ===
Rent-seeking is distinguished in theory from [[Profit (economics)|profit-seeking]], in which entities seek to extract value by engaging in mutually beneficial transactions.<ref>{{cite web |url=http://ingrimayne.saintjoe.edu/econ/government/RentSeeking.html |title=Rent Seeking |first=Robert|last= Schenk |work=CyberEconomics |access-date=11 February 2007 |archive-url=https://web.archive.org/web/20060103062417/http://ingrimayne.saintjoe.edu/econ/government/RentSeeking.html |archive-date=3 January 2006}}</ref> Profit-seeking in this sense is the creation of wealth, while rent-seeking is "[[profiteering (business)|profiteering]]" by using social institutions, such as but not limited to the power of the state, to redistribute wealth among different groups without creating new wealth.<ref>{{cite journal |last=Conybeare |first=John A. C. |year=1982 |title=The Rent-Seeking State and Revenue Diversification |journal=[[World Politics]] |volume=35 |issue=1 |pages=25–42 |doi=10.2307/2010278 |jstor=2010278 |s2cid=154601921 }}</ref> In a practical context, income obtained through rent-seeking may contribute to [[Profit (accounting)|profits in the standard, accounting sense of the word]].

"Rent-seeking" is an attempt to obtain economic rent (i.e., the portion of income paid to a [[factor of production]] in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by [[value added|creating new wealth]]. Rent-seeking implies the extraction of uncompensated value from others without making any contribution to [[productivity (economics)|productivity]]. Because the nature of rent-seeking implies a fixed cost payment, only wealthy participants engage in these activities as a means of protecting their wealth from expropriation.<ref>{{cite book |last=Chakraborty |first=Shankha |year=2005 |title=Rent Seeking |series=IMF Working Papers |volume=05 |publisher=International Monetary Fund |issue=43 |page=1 |doi=10.5089/9781451860627.001 |isbn=978-1-4518-6062-7 |s2cid=15557383 | issn=1018-5941}}</ref>

===Tullock paradox=== 
The Tullock paradox is the apparent [[paradox]], described by economist [[Gordon Tullock]], on the low costs of rent-seeking relative to the gains from rent-seeking.<ref name="tullock1980">{{cite book |last=Tullock |first=Gordon |year=1980 |chapter=Efficient rent-seeking |title=Toward a theory of the rent-seeking society |editor=Buchanan, J. |editor2=Tollison, R. |editor3=Tullock, G. |publisher=Texas A&M Press |place=College Station |pages=97–112 |isbn=0-89096-090-9}}</ref><ref name="connes">{{cite periodical |date=September 2003|title=Loss Aversion and the Tullock Paradox |last1=Connes |first1=Richard |last2=Hartley |first2=Roger |citeseerx=10.1.1.624.4082 |periodical=Discussion Papers in Economics |number=3/17 |url=https://www.researchgate.net/publication/5159311 |via=ResearchGate}}</ref>

The paradox is that rent-seekers wanting political favors can bribe politicians at a cost much lower than the value of the favor to the rent-seeker. For instance, a rent seeker who hopes to gain a billion dollars from a particular political policy may need to bribe politicians with merely ten million dollars, which is about 1% of the gain to the rent seeker. [[Luigi Zingales]] frames it by asking, "Why is there so little money in politics?" because a naïve model of political bribery and/or campaign spending should result in beneficiaries of government subsidies being willing to spend an amount approaching the value of the profits derived from the subsidies themselves, when in fact only a small fraction of that is spent.<ref>{{cite book|first1=Luigi|last1=Zingales|title=A Capitalism for the People: Recapturing the Lost Genius of American Prosperity|url=https://books.google.com/books?id=USzXmw5CJ_MC|publisher=Basic Books|date=5 June 2012|isbn=978-0-465-02947-1|via=Google Books}}</ref>

Several possible explanations have been offered for the Tullock paradox:<ref name=Zingales>{{Cite book |url=https://books.google.com/books?id=8rCZAgAAQBAJ&pg=PA75 |title=A Capitalism for the People: Recapturing the Lost Genius of American Prosperity |first=Luigi |last=Zingales |publisher=Basic Books |year=2014 |isbn=978-0-465-03870-1 |pages=75–78}}</ref>

# Voters may punish politicians who take large bribes or live lavish lifestyles. This makes it hard for politicians to demand large bribes from rent-seekers.
# Competition between different politicians eager to offer favors to rent-seekers may bid down the cost of rent-seeking.
# Lack of trust between the rent-seekers and the politicians, due to the inherently underhanded nature of the deal and the unavailability of both legal recourse and reputational incentives to enforce compliance, pushes down the price that politicians can demand for favors.
# Rent-seekers can use a small part of the benefit gained to make contributions to the politicians who provided enabling legislation.

===Regulatory capture===
[[Regulatory capture]] is a related term for the collusion between firms and the government agencies assigned to regulate them, which is seen as enabling extensive rent-seeking behavior, especially when the government agency must rely on the firms for knowledge about the market. Studies of rent-seeking focus on efforts to capture special [[coercive monopoly|monopoly privileges]] such as manipulating government regulation of [[Capitalism|free enterprise]] competition.<ref>{{cite book |last1=Feenstra |first1=Robert |last2=Taylor |first2=Alan |year=2008 |title=International Economics |publisher=Worth Publishers |location=New York |isbn=978-0-7167-9283-3 |url-access=registration |url= https://archive.org/details/internationaleco0000feen }}</ref> The term ''monopoly privilege rent-seeking'' is an often-used label for this particular type of rent-seeking. Often-cited examples include a lobby that seeks economic regulations such as [[tariff]] protection, quotas, subsidies,<ref>{{cite book |first=Charles Kershaw |last=Rowley |title=The Political Economy of Rent-Seeking |url= https://books.google.com/books?id=OVkEPjHYik0C&pg=PA226 |year=1988 |publisher=Springer |page=226 |isbn=978-0-89838-241-9}}</ref> or extension of copyright law.<ref>{{cite journal |first=Lanier |last=Saperstein |title=Copyrights, Criminal Sanctions and Economic Rents: Applying the Rent Seeking Model to the Criminal Law Formulation Process |year=1997 |volume=87 |issue=4 |pages=1470–1510 |journal=The Journal of Criminal Law and Criminology |jstor=1144023 |doi=10.2307/1144023 |url= https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=6939&context=jclc|url-access=subscription }}</ref> Anne Krueger concludes that "empirical evidence suggests that the value of rents associated with import licenses can be relatively large, and it has been shown that the welfare cost of quantitative restrictions equals that of their tariff equivalents plus the value of the rents".<ref name=Krueger1974/>

===Incentives===
{{See also|Accountability}}
A 2013 study by the [[World Bank]] showed that the [[incentive]]s for policy-makers to engage in rent-provision is conditional on the institutional incentives they face, with elected officials in stable high-income democracies the least likely to indulge in such activities vis-à-vis entrenched bureaucrats and/or their counterparts in young and quasi-democracies.<ref>{{cite journal |last=Hamilton |first=Alexander |year=2013 |title=Small Is Beautiful, at Least in High-Income Democracies: The Distribution of Policy-Making Responsibility, Electoral Accountability, and Incentives for Rent Extraction |journal=Policy Research Working Paper; No. 6305 |series=Policy Research Working Papers |publisher=World Bank |location=Washington, DC |doi=10.1596/1813-9450-6305 |hdl=10986/12197 |s2cid=9605795 |hdl-access=free}}</ref>

==== Moral hazard ====
From a theoretical standpoint, the [[moral hazard]] of rent-seeking can be considerable. If "buying" a favorable regulatory environment seems cheaper than building more efficient production, a firm may choose the former option, reaping incomes entirely unrelated to any contribution to total wealth or well-being. This results in a sub-optimal [[allocation of resources]]{{snd}}money spent on lobbyists and counter-lobbyists rather than on [[research and development]], on improved business practices, on [[Professional development|employee training]], or on additional [[capital goods]]{{snd}}which slows economic growth. Claims that a firm is rent-seeking, therefore, often accompany allegations of government corruption, or the undue influence of [[Advocacy group|special interests]].<ref name=Eisenhans>{{cite book |last=Eisenhans |first=Hartmut |title=State, class, and development |year=1996 |publisher=Radiant Publishers |isbn=978-81-7027-214-4}}</ref>

====Illegal====
Some rent-seeking behaviors, such as the forming of [[cartel]]s or the [[Bribery|bribing]] of politicians, are illegal in many market-driven economies.

===Economic effects===
Rent-seeking can prove costly to economic growth; high rent-seeking activity makes rent-seeking more attractive due to the natural and growing returns that result from it. Thus, organizations value rent-seeking over productivity. In this case, there are very high levels of rent-seeking, accompanied by very low levels of output.{{citation needed|date=September 2014}} Rent-seeking may grow at the cost of economic growth because rent-seeking by the state can easily hurt innovation. Ultimately, public rent-seeking hurts the economy the most because innovation drives economic growth.<ref name=Murphy>{{Cite journal | url=https://scholar.harvard.edu/shleifer/publications/why-rent-seeking-so-costly-growth |title = Why is Rent-Seeking So Costly to Growth? |jstor=2117699 |journal = American Economic Review: Papers and Proceedings|volume = 83|issue = 2|pages = 409–414|year = 1993|last1 = Murphy|first1 = Kevin|last2 = Shleifer|first2 = Andrei|last3 = Vishny|first3 = Robert}}</ref>

Government agents may initiate rent-seeking, as by soliciting bribes or other favors from the individuals or firms that stand to gain from having special economic privileges, which opens up the possibility of [[Exploitation of labour|exploitation]] of the consumer.<ref name="Dauderstädt">{{cite book |editor=Michael Dauderstädt |editor2=Arne Schildberg |title=Dead Ends of Transition: Rentier Economies and Protectorates |year=2006 |publisher=Campus Verlag |isbn=978-3-593-38154-1 |url-access=registration |url=https://archive.org/details/deadendsoftransi0000unse }}</ref> It has been shown that rent-seeking by [[bureaucracy]] can push up the cost of production of [[Public good (economics)|public good]]s.<ref name=Niskanen>{{cite book |last=Niskanen |first=William |year=1971 |title=Bureaucracy and Representative Government |url=https://archive.org/details/bureaucracyrepre0000nisk |url-access=registration |publisher=Aldine-Atherton, Chicago|isbn=978-0-202-06040-8 }}</ref> It has also been shown that rent-seeking by tax officials may cause a loss in revenue to the public exchequer.<ref name="Chowdhury 2006" />

[[Mancur Olson|Mançur Olson]] traced the historic consequences of rent seeking in ''The Rise and Decline of Nations''. As a country becomes increasingly dominated by organized interest groups, it loses economic vitality and falls into decline. Olson argued that countries that have a collapse of the political regime and the interest groups that have coalesced around it can radically improve productivity and increase national income because they start with a clean slate in the aftermath of the collapse. An example of this is [[Japanese post-war economic miracle|Japan]] after World War II. But new coalitions form over time, once again shackling society to redistribute wealth and income to themselves. However, social and technological changes have enabled the emergence of new enterprises and groups.<ref name=Mokyr>{{Cite journal | url=https://cpb-us-e1.wpmucdn.com/sites.northwestern.edu/dist/3/1222/files/2018/02/Mokyr-Nye-Southern-EconJournal-2k1u4v2.pdf | archive-url=https://web.archive.org/web/20191216230454/https://cpb-us-e1.wpmucdn.com/sites.northwestern.edu/dist/3/1222/files/2018/02/Mokyr-Nye-Southern-EconJournal-2k1u4v2.pdf | archive-date=2019-12-16 | title=Distributional Coalitions, the Industrial Revolution, and the Origins of Economic Growth in Britain| journal=Southern Economic Journal| volume=74| issue=1| pages=50–70| year=2007| last1=Mokyr| first1=Joel| last2=Nye| first2=John V. C.| doi=10.1002/j.2325-8012.2007.tb00826.x |id=[https://EconPapers.repec.org/RePEc:sej:ancoec:v:74:1:y:2007:p:50-70 RePEc:sej:ancoec:v:74:1:y:2007:p:50-70]}}</ref>

A study by Laband and [[John Sophocleus]] in 1988<ref name=Leeson>{{Cite book |jstor=j.ctt7t3fh|title=The Invisible Hook: The Hidden Economics of Pirates|last1=Leeson|first1=Peter T.|year=2009|isbn=978-0-691-15009-3 |publisher= Princeton University Press|page=191|title-link=The Invisible Hook}}</ref> estimated that rent-seeking had decreased total income in the US by 45 percent. Both Dougan and Tullock acknowledge the difficulty in determining the cost of rent-seeking. Rent-seekers of government-provided benefits will, in turn, spend up to that amount of benefit to gain those benefits, in the absence of, for example, the collective-action constraints highlighted by Olson. Similarly, taxpayers lobby for loopholes and will spend the value of those loopholes, again, to obtain those loopholes (again, absent collective-action constraints). The total of wastes from rent-seeking is then the total amount from the government-provided benefits and instances of tax avoidance (valuing benefits and avoided taxes at zero). Dougan says that the "total rent-seeking costs equal the sum of aggregate current income plus the net deficit of the public sector".<ref name=Dougan>{{cite journal |last=Dougan |first=William R. |year=1991 |title=The Cost of Rent Seeking: Is GNP Negative? |journal=Journal of Political Economy |volume=99 |issue=3 |pages=660–664 |doi=10.1086/261773 |s2cid=154489617 }}</ref>

Mark Gradstein writes about rent-seeking in the context of public goods provision, stating that public goods are determined by rent-seeking or lobbying activities. But the question is whether private provision with free-riding incentives or public provision with rent-seeking incentives is more inefficient in its allocation.<ref name=Gradstein>{{cite journal |last=Gradstein |first=Mark |year=1993 |title=Rent Seeking and the Provision of Public Goods |journal=The Economic Journal |volume=103 |issue=420 |pages=1236–1243 |doi=10.2307/2234249 |jstor=2234249 }}</ref>

Political rent-seeking can also affect immigration. Welfare states incentivize unproductive migration and can perpetuate past behaviors of not accumulating personal wealth and being dependent on government transfers.<ref>{{cite web |last1=Nannestad |first1=Peter |title=Taxing the rich or the poor?: Immigrants on the dole as the socially optimal policy outcome for rational egalitarians |url=https://www.researchgate.net/publication/242395368 |website=researchgate |publisher=Res |access-date=3 May 2022}}</ref> Alternatively, productive migrants are incentivised to leave rent-seeking societies, possibly resulting in further economic decline.<ref>{{cite book |last1=Hillman |first1=Ayre |title=The Elgar Companion to Public Choice, Second Edition |chapter=Rent Seeking |date=2013 |pages=307–330 |chapter-url=https://www.researchgate.net/publication/286953357 |doi=10.4337/9781849802857.00032 |isbn=9781849806039 }}</ref>

The Nobel Memorial Prize-winning economist [[Joseph Stiglitz]] has argued that rent-seeking contributes significantly to [[income inequality in the United States]] through lobbying for government policies that let the wealthy and powerful get income, not as a reward for creating wealth, but by grabbing a larger share of the wealth that would otherwise have been produced without their effort.<ref name=Stiglitz>Stiglitz, Joseph E. (4 June 2012). ''The Price of Inequality: How Today's Divided Society Endangers Our Future''. p. 32. Norton. Kindle Edition.</ref><ref name=Lind>{{cite news |last=Lind |first=Michael |title=How rich "moochers" hurt America |newspaper=Salon |date=22 March 2013 |url=http://www.salon.com/2013/03/22/how_rich_moochers_ruin_america/ |access-date=7 April 2013}}</ref> [[Thomas Piketty]], [[Emmanuel Saez]], and [[Stefanie Stantcheva]] have analyzed international economies and their changes in tax rates to conclude that much of income inequality is a result of rent-seeking among wealthy tax payers.<ref name=Piketty>{{cite journal |last1=Piketty |first1=Thomas |first2=Emmanuel |last2=Saez |first3=Stefanie |last3=Stantcheva |title=Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities |journal=American Economic Journal: Economic Policy |volume=6 |issue=1 |year=2014 |pages=230–71 |doi=10.1257/pol.6.1.230 |s2cid=13028796 |url=http://elsa.berkeley.edu/~saez/piketty-saez-stantchevaNBER11thirdelasticity.pdf }}</ref>

Laband and [[John Sophocleus]] suggest that the lack of empirical evidence on rent-seeking is due to the broad scope of rent-seeking and rent avoidance activities. Additionally, they suggest that many economic performance measures, such as Gross Domestic Product, include goods and services that are part of the rent-seeking process.<ref>{{cite journal |last1=Laband |first1=David |last2=Sophocleus |first2=John |title=Measuring rent-seeking |journal=Public Choice |date=2019 |volume=181 |issue=1–2 |pages=49–69 |url=https://www.researchgate.net/publication/325879949 |doi=10.1007/s11127-018-0566-9 |s2cid=254934890 }}</ref>

In 2023, [[Angus Deaton]] wrote:<blockquote>In retrospect it is not so surprising that free markets, or at least free markets with a government that permits and encourages rent seeking by the rich, should produce not equality but an extractive elite that predates on the population at large. Utopian rhetoric about freedom has led to an unjust social dystopia, not for the first time. Free markets with rent seekers are not the same as ''competitive'' markets; indeed, they are often exactly the opposite.<ref name="Deaton2023" /></blockquote>

In some cases, rent-seeking can provide a net positive for an economy. Shannon K. Mitchell's article "The Welfare Effects of Rent-Saving and Rent-Seeking" provides an example of this through a model of rent-seeking, where firms need to expand to obtain their exporting rents.<ref>{{cite journal |last=Shannon |first=Mitchell |year=1993 |title=The Welfare Effects of Rent-Saving and Rent-Seeking |journal=The Canadian Journal of Economics |publisher=Wiley on behalf of the Canadian Economics Association |volume=26 |issue=3 |pages=660–669 |doi=10.2307/135893 |jstor=135893}}</ref>

===Criticism of theories===
In the 1980s, critiques of rent-seeking theory began to emerge, questioning the ambiguity of the concept of "wasted resources" and the reliability of the assumptions being made from it.<ref name="Samuels 1992 111–128">{{cite book |chapter-url=https://link.springer.com/chapter/10.1007/978-1-349-12377-3_6 |last= Samuels |first=W. J. |title= Essays on the Economic Role of Government |chapter= A Critique of Rent-seeking Theory |year=1992 |volume=2 |pages=111–128 |doi=10.1007/978-1-349-12377-3_6|isbn= 978-1-349-12379-7 }}</ref> Samuels argues that [[productivity]] is defined by rent-seeking theorists as a strictly physical property but ignores the rights that surround and define the product. He further asserts that rent-seeking theorists ignore a fundamental principle of being economic actors: that we live in markets of [[scarcity|scarce resources]] and it is how we use these resources which drives [[supply and demand]], and the notion of "wasted resources" rejects our preferences to allocate those resources.<ref name="Samuels 1992 111–128"/>

Writing in ''[[The Review of Austrian Economics]]'', [[Ernest C. Pasour]] says that there may be difficulties distinguishing between beneficial profit-seeking and detrimental rent-seeking.<ref>{{cite journal |url=https://www.mises.org/journals/rae/pdf/rae1_1_8.pdf |last=Pasour |first=E. C. |title=Rent Seeking: Some Conceptual Problems and Implications |journal=[[The Review of Austrian Economics]] |year=1987 |volume=1 |issue=1 |pages=123–143 |doi=10.1007/BF01539337 |s2cid=18809359 }}</ref>

==Examples==
[[File:PapalPolitics2.JPG|thumb|''Antichristus'',<ref>{{cite book |url= https://books.google.com/books?id=NMQ_Ar84DCcC |title=Passional Christi und Antichristi |last1=Luther |first1=Martin |year=1521 }}</ref> a woodcut by [[Lucas Cranach the Elder]], of the pope using the temporal power to grant authority to a ruler contributing generously to the Catholic Church]]

The classic example of rent-seeking, according to [[Robert Shiller]], is that of a property owner who installs a chain across a river that flows through their land and then hires a collector to charge passing boats a fee to lower the chain. There is nothing productive about the chain or the collector, nor do passing boats get anything in return. The owner has made no improvements to the river and is not adding value in any way, directly or indirectly, except for themselves. All they are doing is finding a way to [[Social parasitism (offense)|obtain money]] from something that used to be free.<ref>{{cite web |last=Shiller |first=Robert |author-link=Robert Shiller |date=20 September 2013 |title=The Best, Brightest and Least Productive? |url=http://www.project-syndicate.org/commentary/the-rent-seeking-problem-in-contemporary-finance-by-robert-j--shiller |archive-url=https://web.archive.org/web/20211016052828/https://www.project-syndicate.org/commentary/the-rent-seeking-problem-in-contemporary-finance-by-robert-j--shiller-2013-09 |archive-date=October 16, 2021 |website=project-syndicate.org |publisher=[[Project Syndicate]]}}</ref>

An example of rent-seeking in a modern economy is spending money on [[lobbying]] for government subsidies to be given wealth that has already been created, or to impose regulations on competitors to increase one's own market share.<ref>{{cite web |last1=Samples |first1=John |title=An Introduction to Rent Seeking |url= https://www.libertarianism.org/blog/introduction-rent-seeking |work=libertarianism.org |date=May 30, 2012 }}</ref> 

Economists such as [[Lord Turner of Ecchinswell|Lord Adair Turner]], the former chair of the British [[Financial Services Authority]], have argued that [[Financial innovation|innovation in the financial industry]] is often a form of rent-seeking.<ref>{{cite report |last=Turner |first=Adair |title= Securitisation, Shadow Banking and the Value of Financial Innovation |publisher=Johns Hopkins University |date=19 April 2012 |series=School of Advanced International Studies |issue=The Rostov Lecture on International Affairs |url= http://www.fsa.gov.uk/static/pubs/speeches/0419-at.pdf |archive-url= https://web.archive.org/web/20121003063000/http://www.fsa.gov.uk/static/pubs/speeches/slides-0419-at.pdf|archive-date=3 October 2012 }}</ref><ref>{{cite speech |last=Turner |first=Adair |title=What do banks do, what should they do and what public policies are needed to ensure best results for the real economy? |website= FSA.gov.uk| date=17 March 2010 |page=27 |url= http://www.fsa.gov.uk/pubs/speeches/at_17mar10.pdf |archive-url= https://web.archive.org/web/20101007114307/http://www.fsa.gov.uk/pubs/speeches/at_17mar10.pdf|archive-date=7 October 2010 }}[?]</ref>

===Corruption===
The concept of rent-seeking would also apply to [[corruption]] of bureaucrats who solicit and extract "bribe" or "rent" for applying their legal but discretionary authority for awarding legitimate or illegitimate benefits to clients.<ref name="Chowdhury 2006">{{cite book |last=Chowdhury |first=Faizul Latif |year=2006 |title=Corrupt Bureaucracy and Privatization of Tax Enforcement in Bangladesh |publisher=Pathak Shamabesh, Dhaka |isbn=978-984-8120-62-0}}</ref> For example, taxpayers may bribe officials to lessen their tax burden. According to Anne Krueger, the political forces that lead to debt difficulties are powerful.<ref>Krueger, Anne. (1988). "Resolving the Debt Crisis and Restoring Developing Countries' Creditworthiness." Paper presented at the Carnegie-Rochester Public Policy Conference, University of Rochester.</ref><ref>Chari. (2021). p. 103.</ref>

===Licensing===
Another example of rent-seeking is the limiting of access to lucrative occupations, as by medieval [[guild]]s or modern state certifications and [[occupational licensing]]. According to some libertarian perspectives, taxi licensing is a textbook example of rent-seeking.<ref>{{cite book |last1=McTaggart |first1=Douglas |title=Economics |date=2012 |publisher= Pearson Higher Education |isbn=978-1-4425-5077-3 |page=224}}</ref> To the extent that the issuing of licenses constrains overall supply of taxi services (rather than ensuring competence or quality), forbidding competition from other [[vehicles for hire]] renders the (otherwise consensual) transaction of taxi service a forced transfer of part of the fee, from customers to taxi business proprietors.

===Subsidies===
Rent-seeking through government enterprise can take the form of seeking [[subsidies]] and avoiding [[tariffs]]. This seems like the actions of a firm looking for investment in [[productivity]], but in doing so, creates an exclusionary effect for more productive firms.<ref>{{cite journal |first1=Liu |last1=Baohua |first2=Lin |last2=Yan |first3=Chan |last3=Kam.C |first4=Fung |last4=Hung-Gay |title=The dark side of rent-seeking: The impact of rent-seeking on earnings management |year=2018 |volume=91 |issue=1 |pages=94–107 |journal=Journal of Business Research |doi=10.1016/j.jbusres.2018.05.037 |s2cid=158315455 }}</ref>

Lotta Moberg presents an argument that export processing zones (EPZs) allow governments to choose exporting industries that receive tariffs, allowing rent-seeking to take place. An example of this occurred in Latin America in the 1960s with [[Joaquín Balaguer]]'s response to pressure from the United States to open the Dominican Republic's export market. At the time, the United States was a significant trading partner for sugar, while providing foreign aid and military support, which allowed Balaguer's regime to take hold. Joaquín Balaguer utilized EPZs to permit specific markets to remain tariffed while appeasing those facing political pressures. This created a sub-optimal environment for exporters as they were able to invest in rent-seeking activities ([[lobbying]]) to gain access to EPZs to achieve tax and [[tariff]] exemptions.<ref>{{cite journal |last=Moberg |first=Lotta |title=Liberalizing rent-seeking: How export processing zones can save or sink an economy |year=2018 |volume=33 |issue=4 |pages=61–89 |journal=Journal of Private Enterprise |publisher=Association of Private Enterprise Education |location=Texas|issn=0890-913X |url-access=registration |url= http://journal.apee.org/index.php?title=2018_Journal_of_Private_Enterprise_Vol_33_No_4_Winter_parte4}}</ref>

==See also==
{{Portal|economics|business|law}}
{{div col|colwidth=11em}}
* [[Cartel]]
* {{section link|Car dealership#Regulations that protect car dealers}}
* [[Client politics]]
* [[Crony capitalism]]
* [[Cybersquatting]]
* [[Price elasticity of supply|Elasticity of supply]]
* [[Enshittification]]
* [[Geolibertarianism]]
* [[He who does not work, neither shall he eat]]
* [[Intellectual property]]
* [[Landed gentry]]
* [[Land monopoly]]
* [[Land value tax]]
* [[Law of rent]] ([[David Ricardo|Ricardo]])
* [[Legal plunder]]
* ''[[The Logic of Collective Action]]''
* [[Manorialism]]
* [[Patent troll]]
* [[Prisoner's dilemma]]
* [[Rentier state]]
* [[Royalty payment]]
* [[Software patent]]
* [[Tragedy of the anticommons]]
* [[Unearned income]]
* [[Unjust enrichment]]
* [[Value capture]]
* [[White-collar crime]]
{{div col end}}

==References==
{{Reflist}}

== Further reading ==
* {{cite book |last=Chowdhury |first=Faizul Latif |title=Corrupt Bureaucracy and Privatization of Tax Enforcement in Bangladesh |year=2006 |publisher = Pathak Shamabesh |location = Dhaka |isbn=978-984-8120-62-0 |pages=25–34}}
* {{cite encyclopedia |last=Ikeda |first=Sanford |editor-first=Ronald |editor-last=Hamowy |editor-link=Ronald Hamowy |encyclopedia=The Encyclopedia of Libertarianism |chapter = Rent Seeking |chapter-url = https://books.google.com/books?id=yxNgXs3TkJYC |year=2008 |publisher=[[SAGE Publishing|SAGE]]; [[Cato Institute]] |location=Thousand Oaks, CA |doi=10.4135/9781412965811.n259 |isbn=978-1-4129-6580-4 |oclc=750831024 |lccn=2008009151 |pages=422–23 }}
* {{cite book |last=Tullock |first=Gordon |title=The New Palgrave: A Dictionary of Economics |year=1987 |publisher=Palgrave Macmillan |isbn=978-0-333-37235-7 |volume=4 |pages=147–49 |chapter=Rent seeking |no-pp=true |title-link=The New Palgrave: A Dictionary of Economics }}
* {{cite book |last=Tullock |first=Gordon |title=The Rent-Seeking Society: The Selected Works of Gordon Tullock, Vol. 5 |year=2005 }}

==External links==
* [https://www.economist.com/economics-a-to-z#rent-seeking Rent-seeking] at ''The Economist''
* {{cite encyclopedia |last1=Henderson |first1=David R. |author-link1=David R. Henderson |encyclopedia=[[Concise Encyclopedia of Economics]] |title=Rent Seeking |url=http://www.econlib.org/library/Enc/RentSeeking.html |year=2008 |edition=2nd |publisher=[[Library of Economics and Liberty]] |location=Indianapolis |isbn=978-0-86597-665-8 |oclc=237794267}}
* [https://web.archive.org/web/20151223122154/http://core.ac.uk/download/files/103/2792081.pdf ''Rent-Seeking as Process''] by Mushtaq Khan

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